Hot Marketplace

By eweek  |  Posted 2001-05-28 Print this article Print

Hot Marketplace

While many e-commerce marketplaces are closing or struggling, the online travel industry is on fire. More consumers will use the Internet to purchase travel this year than ever before, said Heidi Kim, an analyst at Jupiter Media Metrix.

Online bookings will represent 7 percent of the travel market this year, and that will grow to 20 percent within five years, she said. And total U.S. leisure and business online travel purchases will more than triple in the next five years, from $18 billion in 2000 to $63 billion in 2006, Kim predicted. "The Internet will continue to grow as an important channel for information, products and services, precisely because of its ability to help travelers find the best possible fares and rates," Kim said.

Overall, the online travel industry reached $1.2 billion in sales in January, representing nearly one-third of all e-commerce transactions, according to a survey by Nielsen//NetRatings and Harris Interactive.

Online travel sites spurred another $681 million in offline revenue generated by shoppers who logged on to compare prices, but then made purchases by telephone, fax or in person.

"For every one person we sell something to, there are 20 people who use us and dont buy from us," said Richard Barton, CEO of Expedia. "Were focusing on converting those shoppers into buyers."

Orbitzs supporters and some industry analysts see that as proof that there is plenty of room for more players in the Internet travel industry.

"Orbitz is coming into a market that is growing like wildfire," said Henry Harteveldt, a senior analyst at Forrester Research. "Online travel, when it comes to the economy, is Teflon-coated. We have every indication that Web travel is growing and that it will continue to grow."

Still, the Internets early travel players are nervous.


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